During the second quarter (Q2) ended 2 August 2025, American Eagle Outfitter's net revenue of $1.28bn marked a slight decrease of 1% compared to the previous year, while total comparable sales also saw a 1% decline.
The revenue figure surpassed expectations by 4.07%, said the company during the earnings call.
The brand's Aerie line experienced a 3% rise in comparable sales, whereas the American Eagle line saw a 3% reduction.
AEO chief executive officer and board executive chairman Jay Schottenstein said: “We were pleased to see an improvement in the business during the second quarter driven by higher demand, lower promotions and well-managed expenses, all of which exceeded our expectations.
“The actions we have taken to better align inventory and strengthen execution laid the groundwork for our results this quarter. Highlighted by Aerie’s top-line increase and better sell-throughs overall, we achieved our second highest enterprise revenues ever recorded for the second quarter.”
American Eagle Outfitters' Q2 FY25 key results
The company’s gross profit for the quarter slightly increased to $499.96m from $498.89m year-over-year.
The gross margin expanded by 30 basis points to reach 38.9%, primarily due to lower markdowns which improved merchandise margins by 50 basis points.
Selling, general and administrative expenses decreased by 1% to $342.21m, consistent with last year as a percentage of sales. This was partly due to reduced compensation costs following expense restructuring, balanced against investments in advertising.
Operating profit rose by 2% year-over-year to $103.09m, with operating margin widening by 20 basis points to 8.0%.
The company’s net income for Q2 FY25 increased marginally to $77.63m from $77.26m in the same quarter of the previous year.
Diluted earnings per share grew by 15% compared to last year, standing at $0.45, with an average diluted share count of 172m.
Inventory levels at the quarter's end were up by 8% to $718m, with unit counts rising by 3%. This inventory cost increase was largely due to tariff impacts, said the company.
Regarding shareholder returns, American Eagle Outfitters concluded its $200m accelerated share repurchase agreement within the quarter, equating to roughly an 18m share buyback.
To date, the company has repurchased shares worth $231m for the fiscal year, reducing outstanding diluted shares by approximately 10%.
Capital expenditures for the quarter amounted to $71m, accumulating a total spend of $133m for the year thus far. The company maintains its capital expenditure forecast for FY25 at around $275m.
Outlook for FY25 and Q3
American Eagle Outfitters anticipates low single-digit growth in comparable sales and predicts a year-over-year decline in gross margin.
Regarding tariffs, AEO chief financial officer Mike Mathias said that guidance for the third and fourth quarter has been provided, with an anticipated impact of $20m in Q3 and between $40m to $50m in Q4.
Operating income is projected to range between $95m and $100m for Q3.
For the full fiscal year, comparable sales are expected to remain roughly stable with an anticipated decrease in gross margin; adjusted operating income is forecasted between $255m and $265m.
“The fall season is off to a positive start. Fuelled by stronger product offerings and the success of recent marketing campaigns with Sydney Sweeney and Travis Kelce, we have seen an uptick in customer awareness, engagement and comparable sales. We look forward to building on our progress and the continued strength of our iconic brands to drive higher profitability, long-term growth and shareholder value," Schottenstein concluded.
